What happens to CFPB if Mulvaney becomes Trump's chief of staff?

Leadership of the Consumer Financial Protection Bureau was unexpectedly thrown into turmoil Friday with multiple reports that President Trump is considering naming acting Director Mick Mulvaney to replace White House Chief of Staff John Kelly.

If that happens, Mulvaney, who is also the head of the Office of Management and Budget, would almost certainly have to give up both of his current jobs.

It would also force President Trump to immediately name a successor at the CFPB or risk having a Democratic appointee take temporary control of the agency.

"Handing the chief of staff job to Mulvaney forces Trump to very quickly approve a new acting CFPB director," said Richard Gottlieb, a partner at Manatt, Phelps & Phelps.

Acting CFPB Director Mick Mulvaney would likely ensure that CFPB Deputy Director Leandra English could not take his place.
Bloomberg News

To be sure, Trump's plans are far from certain. According to The New York Times, Trump has been asking friends about the possibility of replacing Kelly with Mulvaney. A spokesman for Mulvaney has said no such conversations have taken place.

If Mulvaney is taken from the CFPB, it could cause complications for the Trump administration.

For one, absent any other action by Trump, Mulvaney's departure would theoretically leave CFPB Deputy Director Leandra English as acting agency head. Under the Dodd-Frank Act, the deputy director automatically becomes acting director in the absence of a CFPB chief.

That would be ironic — English has sued both Trump and Mulvaney claiming she is already legally the acting head of the agency. Her case is wending its way through the courts, but a lower court has ruled against her suit.

If English succeeded Mulvaney, "it would be quite a stunning turn of events," said Richard Horn, a former CFPB special counsel and adviser, and principal of Richard Horn Legal.

But the Trump administration would almost certainly move to prevent such an occurrence. English would likely attempt to reverse recent actions by Mulvaney, including reopening the CFPB's rule restricting payday lending.

"There is not a scenario where [the Trump administration] would be stupid enough to allow English to step into the leadership position," said Gottlieb. "It would wreak havoc with everything the administration has done."

The Trump administration has maintained that the Federal Vacancies Reform Act allows it to appoint an interim CFPB director. Under the law, any Senate-confirmed appointee can temporarily serve as head of an independent agency.

As a result, if Mulvaney were to move to the White House, Trump could tap Treasury Secretary Steven Mnuchin or Comptroller of the Currency Joseph Otting for the CFPB job.

The lawsuit disputing the CFPB's leadership complicates options for Trump.

In theory, Mulvaney could try to fire English before he leaves office and appoint his own deputy director. But during discussions on the lawsuit, Mulvaney and his attorneys have said that he has no intention of firing English. He could attempt to remove her as deputy director and place her in another position, however.

"Mulvaney doesn't have to fire English, he can remove her as deputy director and could change her job duties," said Ben Olson, a partner at Buckley Sandler and former CFPB deputy assistant director for the Office of Regulations. "The administration has invested significant resources in preventing Leandra English and anyone else associated with prior leadership from taking over the agency."

But that solution is also problematic, potentially helping English's lawsuit against Mulvaney as it could prove to the court she was harmed by Mulvaney's actions.

"It's now more muddy than clear," said Gottlieb. "Mulvaney may not have the authority to appoint his own replacement. It's simply an unresolved question. But for that lawsuit and [former CFPB Director Richard] Cordray's actions, Trump could do something more broadly."

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Peter still believes that a "consumer protection agency" should actually mean an agency that protects lenders and collection agencies who take advantage of consumers. He believes that Corday oppressed those who misled, took advantage of, or committed outright fraud of consumers. To quote Sessions, if you want Dodd Frank changed, then change it, otherwise it should be enforced and supported.